4.1.3 Settlement Method for Currency Options

The following table summarizes how currency options with different option and expiration styles are settled:

Table 4-25 Settlement Method for Currency Options

Option Style	Expiration Style	Exercise Method	Settlement on
Plain Vanilla	American, Bermudan or European	Manual or Auto	For American expiration style: If manually exercised - Any day between earliest exercise date and Contract maturity date (both included), if manually exercised For auto exercise - On maturity, if the option is in-the-money For Bermudan expiration style: If manually exercised - On pre-defined exercise dates or on contract maturity date For auto exercise - On maturity, if the option is in the money For European expiration style: Only on Contract maturity date In all these cases, payment can be a fixed amount if such is opted for
Binary	American or European	Manual or Auto	For American expiration style: If manually exercised - Any day between earliest exercise date and Contract maturity date (both included), if manually exercised For auto exercise - On maturity, if the option is in-the-money. For European expiration style: Only on Contract maturity date Settlement payment is always a fixed amount
Digital	European only	Manual or Auto	Only on Contract maturity date. Settlement payment is always a fixed amount.
No Touch	European only	Auto only	Only on Contract maturity date. Settlement payment is always a fixed amount.

Table 4-26 As per SWIFT 2023 standards, Exercise and Settlement Method for Currency Options

Option Style	Expiration Style	Exercise Method	Exercise on	Settlement on
Plain Vanilla	American, Bermudan or European	Manual or Auto	For American expiration style: manually exercised - Any day between earliest exercise date and Contract maturity date (both included) For Bermudan expiration style: manually exercised - On pre-defined exercise dates or on contract maturity date For European expiration style: manually exercised- Only on Contract maturity date. For all expiration styles, auto exercise is only on maturity date, if the option is in-the-money In all these cases, payment can be a fixed amount if pay fixed (Vanilla) is opted at the deal.	Settlement on Hit - when the option is manually exercised for an American/Bermudan/European style, it is considered as hit. Settlement on Maturity- when the option is auto exercised for any expiration style, it is considered as maturity
Binary	Not applicable	Manual or Auto	Manually exercised- Any day before maturity or on maturity date Auto exercised - On maturity, if the option is in-the-money	Exercise Settlement is always a fixed amount which can be paid at Hit or Maturity.
Digital	Not applicable	Manual or Auto	Manual Exercised- Exercise can happen on or before the maturity manually Auto exercised- On maturity if the option is in the money	Exercise Settlement is always a fixed amount which can be paid at Hit or Maturity.
No Touch	Not applicable	Manual or Auto	Manual Exercised- Exercise can happen on or before the maturity manually Auto exercised- On maturity if the option is in the money	Exercise Settlement is always a fixed amount which can be paid at Hit or Maturity.

Note:

Digital and No touch options will always behave similar to Binary.

When an option can be exercised before maturity, the possibility to settle at maturity or at hit must be specified as explained in the following table.

Table 4-27 Exercise and Settlement

Options	Style	Exercise	Settlement	Field
Vanilla	American	Any Time	Maturity	Sequence B/ 30F
Vanilla	American	Any Time	Hit	Sequence B/30J
Vanilla	Bermuda	Fixed Dates	Maturity	Sequence B/ 30F
Vanilla	Bermuda	Fixed Dates	Hit	Sequence B/30J
Vanilla	European	Maturity Date	Maturity	Sequence B/ 30F
Binary	NA	Any Time	Maturity	Sequence B/ 30F
Binary	NA	Any Time	Hit	Sequence B/ 30J

Note:

As per swift 2023 standards, Digital and No touch will behave similar to Binary.